Does International Aid Work? Who Knows?

Jeffrey Sachs, Director of The Earth Institute at Columbia University, made a rather bold assertion last night on Twitter: “All of the foes of aid — Easterly, Deaton, Mwenda — are really riled up now that aid is clearly working. They’ve upped their vitriol.”

Ryan Briggs, who recently finished an international relations PhD specializing in aid assistance to Africa at American University, challenged him: “Do you actually think they have ill intentions? That they think aid is working and that it makes them upset?”

For my money—and I’m little more than an ignoramus on the topic, so am judging on the merits of the arguments presented, not any real background knowledge of the subject—-Briggs gets the better of the debate. One of the world’s most renowned economists is reduced to arguing that the economics profession is inadequate to measuring whether international aid is actually effective but that, as an economist who has studied the topic passionately for more than two decades, he can assure us that international aid is clearly working. At worst, that’s specious as hell. As best, it’s evidence that Bill Easterly and company are right to be skeptics; one doesn’t spend billions of dollars on faith alone.

Beyond that, the key takeaways for me are (1) that we have little hard data—or, indeed agreement on what to measure and how to measure it—we have despite decades of targeted international assistance and (2) how much of the argument is therefore about motives.

Obviously, Sachs is well intentioned. He’s passionate about helping the world’s poorest people live better lives. But so are people like Easterly.

You’d have to be a special kind of asshole to begrudge a tiny fraction of the GDP of the world’s richest countries if it would allow innocent children to escape starvation, disease, and hopelessness. But, given that those conditions don’t seem to be going away, it’s hardly unreasonable to be skeptical of the methods we’ve been using the last several decades to ameliorate them.

At the end of the day, then, Briggs is right: we’ve got to ask hard questions and demand better data and more accountability. Because the ultimate measure of international aid programs isn’t how much the people running them care but how much good they’re doing. And we really have no clue.

UPDATE: Here’s an excerpt from the FT op-ed by Easterly that presumably triggered Sachs’ initial outburst:

[Bill] Gates has spent the past 13 years giving away a large part of the fortune he amassed as co-founder of Microsoft. In that time, the foundation whose chairmanship he shares with his wife Melinda has made grants amounting to almost $30bn. In a letter published last week, Mr and Mrs Gates attacked the defeatist attitude that sometimes surrounds discussions concerning global development.

As they rightly insist, incredible progress has been made in the past 35 years towards the eradication of hunger and premature death. This refutes the dogma that poor countries are doomed to stay poor, that foreign aid is all wasted, and that saving lives inevitably leads to the misery of overpopulation. These myths, they say, threaten to hold back the poor by persuading humanity that deprivation is an evil with which people must learn to live, when in fact it is a blight that can be eradicated.

Now, Easterly goes from there to issue some criticisms of Gates and those like him. But note the premise: he’s agreeing that things are getting much better on the development front—thus, ceding the point over which Sachs says he’s vitriolic. Indeed, Easterly is demonstrably pro-aid and very much pro-helping those in dire need. He mostly just cautions against hubris:

This revolution is a story of many actors rather than conspicuous heroes, as Angus Deaton explains in his superb book The Great Escape. The germ theory of disease led to more effective efforts to clear up the water supply, and spurred the invention of drugs such as penicillin. Improvements in transport spread knowledge, medicine and equipment more quickly. Educated parents practised better hygiene and knew how to get medicines for their sick children. Money was only a small part of the story. Ghana at the turn of the millennium was a far poorer country than the US at the beginning of the second world war. Yet it had reduced its infant mortality rate to a similar level.

The contribution made by philanthropists and politicians should not be overplayed. Yet, if aid is a feeble instrument of economic progress, it is nonetheless a powerful tool of self-aggrandisement for the western elite. “We” are important because we are the rich people giving aid, the political leaders of the poor countries that receive it and the experts who broker the exchange.

True, some aid programmes have targeted sickness with triumphant success. Mass vaccination campaigns kept millions of children from dying of measles and smallpox. Unicef promoted oral rehydration therapy to fight diarrhoeal diseases that used to cause far more deaths. But even if health aid has been a success, it does not follow that most progress on health is due to aid.

In other important areas, international assistance programmes have a patchy record. As Mr Gates himself acknowledges, there is no definitive proof that aid stimulates the economic growth necessary to lift people out of poverty.

Mr Gates is right that the world’s rich should do more to support public health programmes that work. He is right, too, to decry the time wasted arguing over whether aid works. But the reason he gives – that the argument should concentrate on how to make aid work better – is the wrong one. Aid spending is a drop in the ocean of the budgets of the governments that give it and the economies of the countries that receive it. Whether it works scarcely matters for development.

The obsession with international aid is a rich-world vanity that exaggerates the importance of western elites. It is comforting to imagine that benevolent leaders advised by wise experts could make the poor world rich. But this is a condescending fantasy.

Gideon Rachman does a good job of pushing back against some of Easterly’s criticism of Gates another others as being motivated by “vanity.” But the larger point, that we should be humble about what can be achieved and, especially, cautious about paternalism in dealing with the developing world is well taken.

Comments

There is something that we widely know – the so called Third World needs economic activity to develop and that´s something that´s entirely possible to be done. During the lifetimes of most people reading this blog, both South Korea and Singapore were basically economic basket cases surrounded by swamps. South Korea and Singapore became South Korea and Singapore because they had access to investments, not because they had access to international aid.

People like Jeffrey Sachs and Bono talks as if there are only people starving and dying in Africa. The countries in the continent have their problems, but many of them are in a path for development. ( That´sLuanda, Angola).

If you are distributing food and mosquito nets in these countries, you are not creating conditions for the internal production of these things. African countries needs to, and they can be competitive in the international markets.

By the way, it´s not a coincidence that many proponents of aid are White Men while many of the Critics are Black Africans.

Foreign aid can mean a lot of different things. Health support. Economic development (infrastructure e.g.). Education. Political agendas (USAID calls that Democracy and Governance). The later I rather think is useless, but other components it strikes me one has too many different actions to easily draw a conclusion about “aid’ as a single coherent thing

I can not say a twitter debate terribly impresses one way or another although Sachs is an ass generally.

And Andre Kenjii this statement is specious “it´s not a coincidence that many proponents of aid are White Men while many of the Critics are Black Africans.”

Many proponents of Aid are also Black Africans, as I know oodles of them. The racial demarche is bankrupt in both directions (pro, con), so spare us.

Building on one of Andre’s points, it seems to (economically uneducated) me that direct aid, in the form of either cash or goods, is only effective as a starting point to a broader solution. If it’s the only tool employed, IMHO the approach is doomed to failure, or at the very least, little success.

The racial demarche is bankrupt in both directions (pro, con), so spare us.

I´m not talking about racial demarche. I´m pointing out that the idea that people like Sachs or Gates knows better what´s it´s better for Africa than Dambisa Moyo or Andrew Mwenda, that were born there is ludicrous and neocolonial. It´s the White Man burden all over again.

We know that kleptocrat presidents-for-life often steal, loot and divert foreign aid for their personal purposes.

Apart from that there is the issue of whether of not we are well-advised to provide foreign aid for Western style industrialization projects at all. It is debatable whether or not Western nations – through foreign aid – can stage or create the conditions of industrialization and economic growth in many (or any) Third World post-colonial nations.

I’ve read articles by William Easterly and Jeffrey Sachs on this subject, and it the record is very mixed.

You’d have to be a special kind of asshole to begrudge a tiny fraction of the GDP of the world’s richest countries if it would allow innocent children to escape starvation, disease, and hopelessness. But, given that those conditions don’t seem to be going away, it’s hardly unreasonable to be skeptical of the methods we’ve been using the last several decades to ameliorate them.

Some level of skepticism is fine, but this assumes too much. It’s not at all difficult to see that substantial progress has been made in reducing starvation and disease in the developing world over the past several decades. Smallpox and polio are two outstanding examples.

(I can’t speak to hopelessness, but I understand that reliable metrics show that’s improved everywhere except certain hipster neighborhoods of Brooklyn. I look forward to a very special UN blue helmet episode of Girls later this season.)

White versus Black as point of who knows better is sterile as a point of departure in either direction.

To be fair to @Andre Kenji — and being more than a bit familiar with the argument — the argument isn’t so much to be read along racial lines as power and modernity lines (which the two race colors have historically come to stand for). Essentially its an outgrowth of the colonial movement.

The broader point, as was surfaced in the Kony debate, was that too often aid arguments are simplified to we in the modern west know what’s best for you backwards savages without ever having lived in your world.

I’m aware of the argument. I work in said markets, being a venture investor in certain African countries. It remains a sterile approach to the problem.

I am quite sympathetic to critiques of aid, as I see USAID, UKAID / DFID, etc. doing staggeringly stupid things all the time, but I am also aware that taking about aid, one is talking about a non-coherent category of activities.

I have seen some economic aid efforts that seem well conceived and appear to have a a genuine non PR impact. Other things seem massively misconceived and yet others are in fact hidden export subsidies.

@Lounsbury:
Agreed on all points. This is an exceedingly complex area. The issue is that it’s historically been reduced — especially in popular discourse — to White folks saving brown folks. That’s what I think everyone is doing their best to get away from.

Does foreign aid work? Yes.
Is foreign aid a panacea that cures all the problems of developing nations? No, and no one ever argued it was a panacea.
This is the kind of straw man that conservatives use against domestic antipoverty programs.
“The War on Poverty didn’t wipe out poverty. Therefore anti poverty programs don’t work, and they should all be abandoned!”

it works about as good as affirmative action and the war on poverty/drugs. they’re really creating entire generations of people who rely on aid and will not abandon their unsustainable environs/ways of life. giving money to these orgs. is a “feel good” thing for many, a “career” for others.

It seems to me that this is precisely the dispute between Sachs and Briggs. You’re echoing Sachs’ claims, without addressing Briggs’ questions. What are your metrics to support your claim that foreign aid works? (No snark intended, but there needs to be a quantitative substantiation of the claim to address the skeptics’ concerns)

I think Bill Gates’ arguments work well here. Easterly himself concedes it works. What Easterly seems to be doing here is issuing an entirely unnecessary warning against concluding that foreign aid is a panacea-unnecessary because everyone understands that it is not a panacea. In fact the argument now is that it should be abolished altogether, and nothing put in its place, because it “never works”. This is what most conservatives have been arguing.

Investments like World Bank financed projects in infrastructure are really helpful. Aid, not so, specially since there are some perverse details, like the fact that subsidized food from Iowa is sent to African countries where the same food could be producing, creating local jobs.

It’s true that international aid can mean a lot of different things. Not all of those things have results that are easily quantifiable. It seems like health aid is very effective, food aid often ruins the recipient’s food production system, and big-project loans are ineffective. The impact of aid depends on how well the provider understands and addresses the problem, and how much help or interference the recipient nation provides.

Not all of these issues even have answers, either. What is the goal of aid? “Development.” What is development? “Umm…”

Sometimes the biggest help an outsider can provide is access to trade. Sometimes it’s a bullet behind the ear of the current ruler. Sometimes it’s a People Magazine with Will Smith’s new mansion on the cover. Try quantifying those. Does the local government steal the food and medicine? Do they stabilize the currency? When you measure the results of aid, do you put an asterisk on those cases?

It’s a tough subject. It’s not a good sign that apparent authorities on the subject slip into petty arguments and broad generalizations.

@Pinky: I understand your points. My counter is the equally squishy concept that whenever an expert, such as Sachs, suggests that we shouldn’t insist on using data to quantify results, we should instead just trust an expert (for example…oh, I don’t know…maybe Sachs himself?), I’m skeptical, even though I’m even more of an ignoramus on this topic than James.

One of the world’s most renowned economists is reduced to arguing that the economics profession is inadequate to measuring whether international aid is actually effective but that, as an economist who has studied the topic passionately for more than two decades, he can assure us that international aid is clearly working.

You can extend this to cover most all the field of economics, not just aid.

@Andre Kenji: Another big problem with US produced food aid is the destabilization of food prices that end up taking their toll on local farmers. However, trying to pass a farm bill is tough enough without the reduction of food USAID buys from US farmers to ship overseas, not to mention the subsidies to things like cotton farmers which violate international trade rules.

I don’t much about Korea, but I know a little (always a dangerous thing) about Singapore. Singapore is a very socialist state and invests heavily in its own businesses and people in very targeted ways.

Personally, I think that at least for sub-10million populations, having a ruling elite that really truly wants the place to amount to something has a very big impact. And that is true in Singapore as well as Chicago.

@MarkedMan: With both Singapore and Korea, malaria eradication was a huge investment that paid off handsomely when it came to productivity. Same thing happened in the South with both malaria and hook worm.

This is why it’s fruitless to talk about aid in a general way. Douglass North wrote about a slightly different subject, economic development, and said that it only occurs when institutions are in place such that the profit to be made from producing exceeds the profit to be made from redistributing. Something similar holds true for foreign aid. The really frustrating part is how limited the outsider is in his ability to establish the necessary institutions. (Note that North uses the term “institution” in the broadest sense, including customs and laws.) You can lead a horse to water, but no amount of certainty on your part that he should drink is going to change his mind about drinking.

@Lounsbury: Not being familiar with the detailed definition of socialism I won’t argue the point. But there are a lot of myths about Singapore propagated by the know-nothing righties and Randian fan-boys in the states, and i can vouch for the fact that Singapore has very little laissez faire about it, much less libertarianism. I’ve spent a fair amount of time in Singapore and know quite a few Singaporean citizens pretty well. Here’s a few things most people don’t know:
– Up to a third of the population, perhaps more, are expats. These fall into two categories: rich people there on business (or mega rich fleeing taxes) and laborers filling gaps in the low end labor force.
– Those expats are not citizens. For them it is a libertarian state. If you go broke, get out.
– Taxes may be low, but fees are incredibly high. Ex: A Subaru Forester costs $120K US dollars, plus $65K more for the license plate.
– For citizens, there is some language games going on. Taxes are low, but the government doesn’t count the mandatory 40% contribution to government approved and regulated but privately run retirement and health plans.
– The government constantly is deciding where the country should go next and puts substantial dollars into the kitty for companies willing to invest in those areas. It also has a very generous and extensive native Singaporean business development fund, and extensive investments in schooling and so forth.

So the next time some Randian fan-boy starts extolling Singapore as a libertarian ideal, you can judge for yourself just how much they know what they are talking about.

@MarkedMan: You mistake American free market approaches to capitalism as Capitalism. It is not the case (although Americans being extremely provincial so think): ” i can vouch for the fact that Singapore has very little laissez faire about it, much less libertarianism.” Wonderful, I did not need you to so vouch, as my comment already was that Singa is a dirigiste economy. You can profitably look up dirigisme, but in short it means a state directed capitalist economy, in short, Singa.

Where the blithering on about Rand(ian) and Libertarian comes from rather does escape. I certainly did not so imply in comment, directly or indirectly.

@Lounsbury: Wow thanks so much for your advice. It must be amazing to be you. I had already looked up dirigiste but, you know, a little helpful suggestion about how to better educate myself is always good and rarely meant to be condescending.

And FWIW, after I looked it up I figured you and I were at least roughly on the same page regarding Singapore. But as I mentioned in my post, in the States there are a lot of Randian fan-boys who trot out Singapore as an example of a successful libertarianism and I thought it worth going into a bit of detail for the sake of general interest. Because this is a blog, you see, not a one on one email correspondence and so it’s not always all about you.

And at the terrifying risk of sounding like a condescending a**hat, you might want to think about reading a post a bit before accusing someone of blithering. You might not agree with what someone says or you might even think its unimportant. But not being a di*k is important too.